Freedom of Form and Formalities in General

The freedom of form means that the parties are free to choose the form of the contract and that the contract is binding irrespective of its form. Consequently, e.g. oral contracts are usually just as binding as written contracts.

Certain legal acts have, however, been regarded as justifying requirements in respect of formalities. Form requirements mean a departure from the freedom to choose the form of the contract. The most common formality is the requirement that the contract must be in writing, but other form requirements are also possible. Some contracts must, for example, be signed in the presence of witnesses.

Contracts that must comply with certain formalities are e.g. transfers of real estate, leasehold agreements of commercial property and hire-purchase agreements. A transfer of real estate must be set out in writing. The purchase deed must be signed by both the buyer and the seller, and a notary must attest to the transfer in the presence of all signatories to the deed. (See further Business leases and hire-purchase agreements between companies) Other legal acts subject to form requirements are bills of exchange, promissory notes, marriage, pre-nuptial agreements and wills.

Regardless of the freedom to choose the content of the contract it is advisable to make contracts in writing. The written form aids us to remember what has been agreed. Thus, it becomes easier to prove the existence and exact content of the contract in a potential dispute.